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GDP target unattainable, shipping disruption

China’s statistics office is adept at massaging GDP data. But with many of the indicators that feed into GDP showing year-on-year contractions in April and May, even it won’t be able to deliver published growth at the rate the government wants this year. Meanwhile, the latest port throughput data suggest that Shanghai’s lockdown had a much smaller impact on shipping than commonly supposed.
Mark Williams Chief Asia Economist
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China Data Response

China Activity & Spending (Jul.)

The July data suggest that the post-lockdown recovery lost steam as the one-off boost from reopening fizzled out and mortgage boycotts triggered a renewed deterioration in the property sector. We think the outlook will remain challenging in the coming months as exports turn from tailwind to headwind, the property downturn deepens, and virus disruptions remain a recurring drag. Asia Drop-In (25th Aug.): What’s the economic impact of a weak yen? What does the latest China-Taiwan flare-up mean for decoupling? How ugly are conditions in China’s real estate sector? Join economists from across our Asia services for this regular briefing on the region’s big investment stories. Register now.

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China Economics Update

Surprise rate cut amid economic woes

The People’s Bank (PBOC) has cut its policy rates in response to a loss of economic momentum. A cut to the Loan Prime Rate (LPR) later this month is now a given and we expect additional easing measures further ahead, though it’s far from clear that this will be sufficient to drive a revival in credit growth.

15 August 2022

China Economics Weekly

PBOC turns less dovish on inflation

The PBOC’s latest monetary policy report struck a less dovish tone, warning that inflationary pressure may increase in the near-term. We think these concerns are overdone and that inflation is more likely to drop back over the rest of the year. But for now at least, the PBOC appears to see inflation risks as yet another reason to maintain its restrained approach to stimulus.

12 August 2022

More from Mark Williams

China Data Response

China Activity & Spending (May)

The May data suggest that a post-lockdown recovery got underway across most parts of the economy last month. It is likely to have progressed further in June. But the recent resurgence in infections in both Shanghai and Beijing means that the risk of relapse remains. And the latest data also underline that the recovery in consumer activity still has a longer way to go than that in industry.

15 June 2022

China Economics Weekly

Ant rehabilitation or tech rectification?

If the Ant IPO is back on, as some are reporting, this is less likely to signal that the regulatory crackdown is being rolled back than that regulators feel they have successfully brought the formerly free-wheeling company to heel. More broadly, ceasefire in the regulatory crackdown would lead to less policy uncertainty, which investors would welcome. But it would also leave business conditions in China fundamentally changed.

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China Data Response

China Bank Lending & Broad Credit (May)

Credit growth was stronger than expected last month. It is likely to accelerate following the clear signal in late May that policymakers want banks to step up lending. More policy easing is likely. But private sector credit demand is likely to remain subdued while, on current budgetary plans, local government borrowing is about to slow. A dramatic increase in credit growth still seems unlikely.

10 June 2022
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